I have been selling puts and collecting the premium and in some cases rolling over that option a few times to collect additional premiums... Say you sell 1 put at $20 and collect $100 premium ..few weeks later you roll it over and collect another $50 in premium and then do another roll over and collect another $200 in premium. You now have collected a total of $350 in premium...instead of buying back the option you decide to take the $20 assignment because you want to own the stock.... What is the cost basis of the stock at assignment? Is it $20?? Or is it $16.50 ($3.50 x 100= $350 worth of premium collected) Or are the premiums of option and additional roll overs included in the assignment? Original assignment at $20 -$3.50 worth of premiums collected which would bring the cost basis $16.50 So which one is it?
Definitely your option premium is deducted from your cost. I let my puts to expire and open a new position so I believe it should show you the cost as $20 - $2=$18 and those $50 plus $100 as separate profits. If you now sell call for $2 for $20 and it expires, it wont reduce your cost to $16 but then if you sell another $5 call for $20 after your first call expires, and if that call gets excercised, it will show that you sold it at $25 minus $18 and made $700 profit and in your gain and loss report it will report zero gaon from that $5 call and $2 put option.
"Cost basis of the assignment" is not a thing. The cost basis is the strike, dude. You've shown you have mastered addition so your taxable cost basis is 16.50; unless you're magically tax-exempt wrt options. Obv short vs long term will play a role but you're clearly doing stupid sht so it's all going to be taxed ST. This thread is r*******.
You will be assigned based on your strike price but if sold a put for $2 for the strike price of $20, and if it goes down to $17 and you get assigned at $20, in your account it will show that your cost basis is $18.x X is the commission that you paid for the option assuming that your option trade was not commission free.
Yes. The only trades that I do is selling calls and puts and I see this happens when i get assigned or shares get excercised and I become short
Great, another one-trick pony who has discovered the perpetual money-making machine glitch of free money.